FREE REPORT

BUSINESS
NEGOTIATION
STRATEGIES
HOW TO NEGOTIATE BETTER
BUSINESS DEALS
About the Program on Negotiation at Harvard Law School
Negotiation Editorial Board
Board members are leading
negotiation faculty, researchers,
and consultants affiliated with
the Program on Negotiation at
Harvard Law School.
Max H. Bazerman
Harvard Business School
Iris Bohnet
Harvard Kennedy School
Robert C. Bordone
Harvard Law School
John S. Hammond
John S. Hammond & Associates
Deborah M. Kolb
Simmons School of Management
David Lax
Lax Sebenius, LLC
Robert Mnookin
Harvard Law School
Bruce Patton
Vantage Partners, LLC
Jeswald Salacuse
The Fletcher School, Tufts University
James Sebenius
Harvard Business School
Guhan Subramanian
Harvard Law School and
Harvard Business School
Lawrence Susskind
Massachusetts Institute of Technology
Michael Wheeler
Harvard Business School
Negotiation Editorial Staff
Academic Editor
Guhan Subramanian
Joseph Flom Professor of Law and
Business, Harvard Law School,
Douglas Weaver Professor of Business
Law, Harvard Business School
Editor
Katherine Shonk
Published by
Program on Negotiation
Harvard Law School
Managing Director
Susan Hackley
Assistant Director
James Kerwin
Copyright © 2014 by Harvard University. Tis
publication may not be reproduced in part or
whole without the express written permission
of the Program on Negotiation. You may not
forward this document electronically.
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Table of Contents
So, you want to reach a more creative agreement…but how?
by Katherine Shonk Page 1
Got a raw deal? Renegotiate a better one
by Katherine Shonk Page 5
How to Win a “Beauty Contest”
by Guhan Subramanian Page 8
Want the other side to open up?
by Katherine Shonk Page 10
Building Your Team Online
by Michael Luca Page 13
When a Job Offer is “Nonnegotiable”
by Kevin P. Mohan Page 15
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So, you want to reach a more creative agreement…
but how?
You’ve heard it many times: to get the most out of an agreement and a
new business relationship, you have to collaborate to fnd new sources of value
in addition to claiming value for yourself. Yet coming up with original, value-
creating ideas can be easier said than done.
As Daniel Kahneman explains in his book Tinking, Fast and Slow (Farrar,
Straus and Giroux, 2011), the vigilant, analytic thinking that we strive to adopt
in negotiation is actually less conducive to creativity than the superfcial,
intuitive thinking we ofen try to avoid. In the midst of formulating arguments
and crunching numbers, how can we open our minds to novel ideas? Here we
present three basic techniques that you can use to get your creative juices fowing
the next time you want to squeeze more value out of a negotiation.
1. Break the problem into smaller parts.
Perhaps the most helpful step you can take to promote creativity as
a negotiator is to break problems into smaller components, writes Leigh
Tompson in Te Mind and Heart of the Negotiator (Pearson Prentice Hall,
2011). By doing so, you can build a multi-issue negotiation out of what might
appear to be a single-issue deal.
Negotiators ofen think they are haggling over a single issue, but that is rarely
the case. In 2003, a university and its food and commercial workers’ union avoided
a strike despite a $300,000 defcit by breaking a single issue—the union’s desire for
wage increases—into multiple issues, including job security, parking fees, access
to facilities, and overtime costs, writes Tompson. Identifying multiple issues
positions you to make valuable tradeofs based on your difering preferences.
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How can you foster this type of creative mind-set in a
counterpart who seems fxated on a single issue? Ask lots of
questions, and listen carefully to the answers. Ten consider
using the information the other party shares to open up a
conversation about your respective preferences regarding the
varying issues.
If your counterpart is reluctant to engage in such a
discussion, put together several diferent packages for his
review. When you put forth several proposals at the same time,
you are likely to impress the other side with your fexibility and encourage him to
reciprocate with his own innovative ideas. Even if he doesn’t like any of your initial
proposals, his reactions will steer you in new directions for discussion.
2. Consider novel deal terms.
An array of issues may be on the table, but price can remain a sticking point,
especially in the current economy. Unconventional deal-structuring arrangements
can ofer a way to bridge the gap between what a seller wants and what a buyer
can aford.
When one side doesn’t have the funds needed to push through a deal,
consider whether you can barter your way to the fnish line. Tompson tells the
story of a Formula 1 motor-racing team that wanted to launch a new website
but didn’t have the budget to pay a London-based design studio to do the work.
Instead of haggling over price, the team ofered to pay for the website with
tickets to upcoming Formula 1 races. Te design studio readily agreed, seeing the
opportunity to use the tickets to reward staf members for their performance and
to woo new clients and pamper existing ones.
In addition, as we’ve discussed in past articles, a contingent contract ofers
a way to overcome diferences in beliefs about future events and outcomes.
Instead of arguing about how the future will play out, negotiators can place
a bet on it. Te same design studio described in the previous paragraph took
this route when negotiating a deal to build an e-commerce website for the U.K.
Football Association, writes Tompson. Te association was working with a
limited budget and wasn’t sure the website would pay of. So the studio proposed
3 approaches to more
creative agreements
1. “Unpack” a problem into
its components to uncover
potential tradeoffs.
2. Apply underused deal-structuring
techniques to avoid impasse.
3. Open up your mind through
creativity-generating exercises.
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receiving a percentage of sales from the new site instead of a fat fee for its
work. Such contingencies serve as a safety net that limits each side’s losses if the
agreement goes awry, according to Tompson.
Finally, negotiators ofen overlook opportunities to create more value
by adding conditions to their deals, says Harvard Law School and Harvard
Business School professor Guhan Subramanian. A condition is a deal-structuring
technique that can be expressed in an “if ” statement, such as “I’ll do X if you’ll
do Y.”
According to Subramanian, a condition might have been a game-changer
for NBC in 2001, when the television network was negotiating with Paramount
Studios to renew the eight-year-old hit TV show Frasier for another three
years. NBC wanted a “cutback right” to cancel the show if ratings fell before
the contract ended. Under pressure from the show’s star, Kelsey Grammer,
Paramount refused; NBC backed down and agreed to pay approximately
$5.4 million per episode for Frasier with no cutback right.
Subramanian argued that if NBC had given Paramount a choice between
$5.2 million per episode without a cutback right or $5.5 million with a cutback
right, this condition might have motivated the studio to put pressure on its star
to accept the cutback right. As this example shows, creative negotiators not
only fnd innovative ways to collaborate but also use their creativity to get what
they want.
3. Try some mind games.
We’re all at least vaguely familiar with the concept of brainstorming—the
popular technique used to unleash creativity in groups (and reduce the negative
impact of “groupthink”). In a brainstorming session, individuals are encouraged
to share whatever idea comes to mind, no matter how outlandish. Avoiding the
urge to evaluate and criticize, the group gathers as many ideas as possible. At the
end of the idea-generation stage, members may realize that they have adopted
a more creative mind-set, and they may even fnd some good ideas on the list
they’ve drawn up. Tough research has found mixed results for the overall
efectiveness of brainstorming in generating useful outcomes, negotiators who
want to break out of an analytical mind-set might give it a try.
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In her chapter “Creativity and Problem-Solving” in Te Negotiator’s
Fieldbook (American Bar Association, 2006), Jennifer Gerarda Brown suggests
several other exercises that negotiators might use to stimulate their creativity.
In “mind mapping,” a form of word association, negotiators write down the
problem they are facing and then add whatever related words come to mind on
the same piece of paper. Afer covering the paper with words, negotiators can
draw lines to connect those that seem related. Tis technique is designed to draw
potentially useful links between various aspects of a problem and thus trigger
creative solutions to difcult problems.
Another technique, known as “fipping,” involves considering the opposite
of a given situation or idea. Mediator Christopher Honeyman has found that this
can help parties fnd novel solutions to their conficts. When encouraged to share
their “bad ideas,” disputants may feel freed to ofer ideas they partially or secretly
support. As in brainstorming, Brown writes, being given permission to disclaim
ownership of our ideas may inspire more creative thinking. .
by Katherine Shonk, Editor, Negotiation Briefngs.
First published in the March 2012 issue of Negotiation Briefngs.
Got a raw deal? Renegotiate a better one
If you are stuck coping with a faulty contract, try renegotiation.
Many viewed the deal to be a terrible one from the start. In December 2008,
Richard M. Daley, then Chicago’s mayor, announced that his administration had
agreed to lease the city’s parking meters for 75 years to a private company for
nearly $1.2 billion in an attempt to tackle a budget shortfall of about $500 million.
Te deal was rushed through the city council despite members’ confusion about
what, exactly, they were signing.
Afer Chicago Parking Meters (CPM), an investment group led by Morgan
Stanley, took control of the city’s meters, Chicago drivers quickly found
themselves paying the highest parking rates in the country. And in 2010, the news
broke that, as had been widely suspected, the city had sacrifced billions of dollars
in revenue in the negotiation. Daley spent $1.15 billion of the money paid to the
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city in the parking deal during what proved to be his
fnal term in ofce, leaving just $125 million unspent.
As we described in the article “Help Your Agreement
Go the Distance” in our June 2011 issue, CPM revealed
in a private note sale that it expected to receive $11.6
billion in parking revenues over the course of its lease.
When Rahm Emanuel took ofce as Chicago’s new
mayor in 2011, he vowed to try to get taxpayers a better
parking-meter deal, despite the fact that the 75-year
contract had only just gotten under way. We
look at his administration’s renegotiation tactics with
an eye toward identifying how you can avoid Chicago’s mistakes—both in your
initial negotiations and in your renegotiations.
Attention-getting moves
If you fnd yourself struggling to cope with a lopsided deal, your frst
step should be to call the inequities to the other party’s attention and ask for a
renegotiation. Because most people have an innate desire to be fair, the other
party may be willing to reopen a discussion before the end of your contract
period, especially if you back up your request with convincing evidence.
What if they aren’t? Some would say it’s time to threaten a lawsuit, if you
believe you can make a strong case. But doing so could escalate a situation that
might be resolved more efciently, cheaply, and peacefully.
Tere may be other ways to get your counterpart’s attention. When CPM
submitted a bill for $12 million in lost revenue due to street closings in 2011,
Emanuel refused to pay it. He also refused to reimburse the company for the
$35.5 million it claimed it was owed as a result of cars with disabled-parking
placards and license plates parking for free. He publicly challenged the company’s
right to reimbursement, saying, “Tere’s a new sherif in town.”
Emanuel then put together a team of heavy hitters, including the city’s chief
fnancial ofcer and a prominent hedge fund managing partner, Michael Sacks,
to fght the bills. Tese attention-getting moves worked: CPM agreed to sit down
at the table.
4 steps to midcontract renegotiation
1. Appeal to the other side’s sense of fairness
by presenting objective evidence of a
lopsided contract.
2. If necessary, get your counterpart’s
attention by refusing to meet contested
contract terms.
3. Put heavy hitters in charge of negotiating
contract revisions.
4. Reach out to lawmakers and others who
might be able to help you work around
your obstacles.
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In August 2012, the mayor announced an agreement that the city, and not
CPM, was entitled to determine how much the company was owed due to street
closings. Te city then hired a technology consulting frm to develop sofware to
recalculate the city’s bill. Meanwhile, the city’s dispute with the meter company
over reimbursements for free parking by those with disability designations
entered arbitration.
“A little lemonade”
Te negotiations between CPM and the city’s team continued for months.
In addition to fling legal actions and revoking prime parking spots from CPM’s
control, city representatives sought to resolve a dispute over tens of millions in
unpaid fees.
In April 2013, Emanuel announced the terms of the revised deal, which he
claimed would save the city a projected $1 billion over the course of the 75-year
contract, specifcally by reducing fees billed by CPM for out-of-service meters and
other lost revenue. Te city agreed to pay $8.9 million of the disputed $49 million
that CPM had claimed it was owed. Te new contract also provides for free
parking in many neighborhoods on Sunday, a city tradition that vanished when
CPM took control in 2008.
Yet an analysis by the Chicago Tribune suggested that the renegotiation may
not have resulted in a better overall deal for city taxpayers and drivers. CPM
negotiated to extend the hours of paid parking on most nights other than Sunday.
And the company could net millions in service fees from a pay-by-cell-phone
system that could be added to the contract.
Te city largely lost in the arbitration over disabled-parking permits. Yet
Emanuel has lobbied the Illinois governor to block CPM from seeking further
reimbursements for free parking for those using disabled signs and plates.
Burned by CPM’s initial contract, Chicago reluctantly voted in June to
approve the renegotiated deal. Emanuel has tried to defect criticism that the new
terms don’t go far enough to improve Chicago’s side of the deal. “I’m trying to
make a little lemonade out of a big lemon,” he said. “We can’t make this bad deal
go away, or make it a good one.”
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Toward more successful renegotiation
Te limited success that the City of Chicago had renegotiating its botched
parking-meter deal attests to the difculty of persuading a counterpart to revise
existing contract terms. Perhaps the ultimate lesson from the dispute may be the
value of getting the deal right the frst time. Here are a few tips to follow:
1. Create breaks. Mayor Daley consented to a truly epic 75-year deal with
CPM. Given the difculty of foreseeing how economic and other conditions
will change, try instead to do short-term deals that will allow natural breaks for
renegotiation. A much shorter contract would have allowed the City of Chicago to
examine how the parking deal was working, negotiate adjustments as necessary,
and seek out other bidders in the event of nonagreement.
2. Prepare for disputes. Even with short-term contracts, disputes and
diferences of opinion inevitably arise. Add a clause to your contract that
requires renegotiation, mediation, or arbitration in the event that parties end up
disagreeing about the terms of the contract or how the partnership should unfold.
3. Avoid quick fixes. Daley addressed a short-term crisis—a pressing budget
shortfall—with what appeared to be a simple solution: a cash windfall from a
parking-meter deal. In the midst of an emergency, it’s not unusual for negotiators
to seize on seemingly quick fxes. Unfortunately, short-term thinking can lead to
long-term problems. To avoid this common error, include disinterested parties in
the decision-making process and encourage them to question your judgment.
by Katherine Shonk, Editor, Negotiation Briefngs.
First published in the August 2013 issue of Negotiation Briefngs.
How to Win a “Beauty Contest”
QUESTION
My company is going through a “beauty contest” to try to win a major
contract with a buyer of corporate wear. Te target’s employees have tested our
samples and eliminated several other suppliers based on quality, price, and other
issues. As one of the two suppliers still in the game, we have been invited to attend
a “fnale day.” We have also been asked to “review our ofer as much as possible”
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in advance. On the big day, we expect that we and the other supplier will sit in
separate rooms, and the buyer will go back and forth between us, trying to pressure
both of us and squeeze out the best deal. How should we approach this process?
ANSWER
Competitive bidding processes like the one you describe are becoming
increasingly commonplace as markets become more global, high-tech, and price
sensitive. Neither pure auctions nor pure negotiations, these processes lie in the
middle ground that I call a “negotiauction.” In such situations, you face price
pressure from the buyer across the table, but you’re also vying with competitors
on the same side of the table.
Here are three suggestions to help you get the business without giving away
the store:
1. Clarify their interests and alternatives. Learn as much as you can about the
buyer—both the company and the person or people running the process. Are
they solely concerned about price, or are other issues more important? If you were
them, who else would you be talking to? How is the person making the buying
decision evaluated and compensated?
Consider the recent case of Fairstar Heavy Transport N.V., a Dutch shipping
company that participated in a yearlong negotiauction to provide transportation
services for the Gorgon energy project in Australia. In the fnal meeting, Fairstar
CEO Philip Adkins was confronted with the make-or-break question: “What’s
your best price?” Based on deep preparation, Adkins knew that cost was not a
signifcant issue for his counterpart; Fairstar’s contract would be a drop in the
bucket for a $42 billion energy project. And since BP’s oil spill in the Gulf of
Mexico had just occurred, he also knew that the project manager would be very
concerned about quality and reliability. Finally, Adkins knew that Gorgon had
weak alternatives, as Fairstar’s major competitor had recently dropped out of the
process. As a result, Adkins stuck to his demand: $95,000 per day. Afer a “very
lonely 10 minutes” in the hallway, he got the deal.
2. Make multiple simultaneous offers. Your buyer has asked you to “review your
ofer as much as possible.” You might assume this means you’ve got to cut your
price, but then you risk bidding against yourself if they are lying and there is no
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other bidder. Instead, try providing a few options: “Here is the best we can do on our
current package; here’s another package we can ofer at a lower price but with some
quality adjustments,” and so on. If price is critical for the buyer, but your current
package is not the low-price alternative, such multiple simultaneous ofers (as my
colleagues Max Bazerman and Deepak Malhotra call them) keep you in the game.
3. Look for a “shut-down move.” You note that your buyer is likely to shuttle
between you and your competitor on fnale day. Don’t accept this process as given;
rather, look for opportunities to make a “shut-down move.” As your buyer is about
to shop your ofer back to the other guy, you might say, “What would it take for
us to get this done now?” If a negotiation ensues, be clear that any concessions
you make may expire if the buyer leaves the room. In efect, you are giving your
customer a bit extra in exchange for exclusivity.
Guhan Subramanian
Joseph Flom Professor of Law & Business, Harvard Law School
Douglas Weaver Professor of Business Law, Harvard Business School
Academic Editor, Negotiaton
Author of Dealmaking: Te New Strategy of Negotiauctions
(W. W. Norton & Company, 2011)
First published in the August 2013 issue of Negotiation Briefngs.
Want the other side to open up?
It may be simpler than you think, a new study suggests.
It was a negotiation cloaked in secrecy. Realizing that two men, adversaries
for a decade, both happened to be in Scottsdale, Arizona, at the same time,
attorney and activist Jerry Crawford brought them to his part-time home in that
city. For fve hours, the two enemies talked face-to-face for the frst time. Teir
negotiations continued in fts and starts in the months ahead, USA Today reports.
Talks broke down fve or six times, but, ultimately, the former adversaries reached
a groundbreaking agreement.
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Te two men in this story are Wayne Pacelle, president of the Humane
Society of the United States, and Gene Gregory, president of United Egg
Producers. For years, they were on opposite sides of a hot-button issue: the egg
industry’s practice of crowding hundreds of thousands of chickens into cages in
a single henhouse. Pacelle’s and Gregory’s organizations have spent millions of
dollars fghting over government proposals regarding chicken cages.
“We could fght the United Egg Producers for another 10 or 15 years and
spend millions and millions of dollars on both sides,” Pacelle told Dan Charles
of National Public Radio’s Morning Edition. “But the other option is we could
sit down together and fgure out a pathway that’s good for industry and better
for animals.”
With the egg industry facing a patchwork of regulations in diferent states,
Gregory agreed to a top-secret meeting with Pacelle at Crawford’s home. Over
the months of negotiation that followed, the men hammered out a proposal that
would give chickens twice as much cage space, plus perches and egg-laying areas,
while also meeting industry concerns regarding egg supply.
Te win-win deal gives egg producers one clear set of regulations to follow
and meets the Humane Society’s goal of improving conditions for chickens
nationwide. If approved by Congress, the plan will be phased in over 15 years.
Once lobbying on opposite sides on Capitol Hill, Pacelle and Gregory now walk
“shoulder to shoulder” seeking support in Congress for the new rules, says Charles.
At the heart of this negotiation lies an open exchange of information
between two men who had little reason to trust each other and much on the
line, including their jobs. Pacelle and Gregory had to share information they had
ample reasons to conceal, such as details about the egg industry’s practices and
the Humane Society’s activism strategy.
Negotiation experts ofen stress that creative, value-generating agreements
are possible only when the parties involved disclose key information, as Pacelle
and Gregory appeared to do in their talks. In particular, revealing the deeper
interests behind our stated positions may be the clearest path to discovering
mutually benefcial tradeofs. But the fear of saying too much—and somehow
giving the other side an edge—ofen causes negotiators to hold back and leave
value on the table.
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Whether dealing with adversaries, customers, coworkers, or even friends,
we need to learn to draw important information out of our counterparts and
ensure that we are being forthcoming as well. Fortunately, this may be easier than
it sounds, according to a new study by Tal G. Zarankin of Radford University
and James A. Wall Jr. of the University of Missouri.
Sharing and reciprocity
Te researchers examined which strategies are most efective at drawing
information out of negotiators. In the study, college students were asked to
play the part of a student negotiating the terms of a part-time job on campus.
Participants shared more information about their best alternative to a negotiated
agreement, or BATNA, and their payofs when their counterparts shared this
type of information themselves. Tey also shared this type of information more
ofen when their counterparts directly asked them to open up. And when their
counterparts both shared and requested information, negotiators responded with
the most information
of all.
Zarankin and Wall attribute these results to the norm of reciprocity—the
universal and powerful urge to respond in kind to
others’ behavior, whether positive or negative. Past
research had already found that negotiators tend
to reciprocate concessions, threats, and emotions.
Now we can add information sharing to the list of
behaviors that you and your counterparts are likely to
reciprocate, perhaps even without much thought.
Te researchers also looked at whether
information about other negotiators’ performance
in similar circumstances causes us to share more
information than we would otherwise in our own
talks. Does aspiring to match or beat the achievements
of others motivate us to share more information in
our negotiations? In fact, it does not, perhaps because
such goals make us overly competitive and less
What should you share?
Here are some types of information you
might share to expand the discussion and
the possibilities for agreement in your next
important negotiation:
■ Information about needs and desires:
“Confidentially speaking, our former service
provider wasn’t able to meet our strict
deadlines. What methods would you use to
make sure the project stays on track?”
■ Information about alternatives: “We are
speaking to a couple of other potential
partners in the event that we can’t get this
deal to work. Are you doing the same?”
■ Information about potential tradeoffs:
“We may be willing to budge a bit on the
financing issue. What would you be willing
to give us in return?”
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cooperative. In the experiment, only requests for information or revelations from
a counterpart motivated greater sharing.
When you share information about your interests and alternatives, and
encourage the other party to do the same, the benefts are likely to outweigh the
costs, this study suggests.
By Guhan Subramanian.
First published in the August 2006 issue of Negotiation Briefngs.
Building Your Team Online
QUESTION
I run a start-up and am looking to hire a team of people to help with
everything from product development to marketing to data entry. I have heard
that online labor markets such as oDesk or vWorker may be a good way to hire
people, but I don’t know how trustworthy they are or how best to negotiate on
them. Any thoughts on taking hiring digital?
ANSWER
One of the more remarkable trends in the recent explosion of online
marketplaces, online labor markets (OLMs) have been transforming the way we
think about hiring and managing. Websites such as oDesk, Elance, and vWorker
allow you to gain access to applicants with a wider range of skills in farther-fung
locations than would otherwise be feasible, especially for a small business looking
for part-time or temporary help. But these sites present challenges that are distinct
from those of traditional labor markets.
To give an example of how an OLM works, let’s say you are looking for a
programmer to do Web development. With job description and requirements in
hand, you would face a series of decisions when posting on an OLM:
Decision #1: Approach them or let them approach you? If you simply posted
the position, you would quickly receive a response . . . and then another, and
another, and another, and so on. Some applicants might ask for more money
than others, and their qualifcations will vary as well. Amid the deluge, it’s easy to
experience choice overload.
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One way to alleviate this problem is to set parameters, frst by allowing only
targeted candidates to apply. Targeting can be done on diferent levels, from
looking at one candidate at a time to fltering candidates with a certain amount
of experience. Tis can greatly simplify the process, especially when a specialized
skill is required.
Decision #2: Whom can you trust? Te main challenge OLMs face is
facilitating trust between strangers. Each potential employee has an online
reputation, which is similar in many ways to an ofine reputation. For example,
you can look at the applicant’s employment history, including ratings and
comments from previous OLM employers. Additional information can include
(self-reported) biographical data and even verifed skill testing by the OLM.
Not surprisingly, applicants with more favorable reputations command a
higher wage.
Decision #3: How should you negotiate? Now it’s time to communicate
with applicants. You may have specifed a price for the job, and they will have
submitted bids, leaving room for negotiation. Because these websites are
competitive labor markets (and hence known for reasonable wages from an
employer’s perspective), focus primarily on worker quality rather than haggling
too much over the wage—you are already getting a good deal! Make sure both you
and the applicant agree exactly on the deliverables and the terms of employment,
such as how you will communicate and how ofen.
Decision #4: How should you manage employees? So you’ve hired your
OLM employees. Almost all OLMs will facilitate their payment for you. As for
managing employees, you can transition employees of of OLMs and interact with
them directly (via e-mail, telephone, and so on), or some OLMs will help you with
it. (oDesk even takes screenshots to show you what your employees are doing.)
OLMs prefer that you stay on the system, as they charge an ongoing commission
that is a percentage of employees’ wages. Tink carefully about the potential
benefts (quality assurance, payment facilitation) of keeping employment online
versus the cost (a substantial fee).
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OLMs will continue to grow in importance in the marketplace. Stay aware
of their quirks and balance costs against quality, and you are likely to beneft
from them.
Michael Luca
Assistant Professor
Harvard Business School
First published in the August 2012 issue of Negotiation Briefngs.
When a Job Offer is “Nonnegotiable”
QUESTION
I am in my fnal year of business school and starting to prepare for job
interviews. I have heard many of the organizations that recruit on campus are not
open to negotiating specifc terms of employment. Rather, they ofer everyone
roughly the same deal terms. To what extent should I respect such conventions
versus trying to negotiate better terms for myself?
ANSWER
As you’ve heard, frms that hire a large number of college or professional-
school graduates into entry-level positions tend to ofer standard packages and
avoid negotiating with new recruits. If a frm hires more than four or fve people
each cycle and has hired “classes” of new employees with similar qualifcations for
years, you may have little room to negotiate your ofer.
In fact, negotiating aggressively in the face of a standard package could cause
the employer to sour on you and retract the ofer. If you are still hired, any gains
that you negotiate could come at the expense of future pay increases, bonuses, or
other perks.
Although negotiation isn’t encouraged in such situations, it isn’t forbidden.
Here are a few tips to help you get a better ofer:
PROGR AM ON NEGOTI ATI ON
16 To subscribe to Negotiation Briefngs, call +1 800-391-8629, write to negotiation@law.harvard.edu, or visit www.pon.harvard.edu.
1. Probe for signs of flexibility. Ofen, by doing some research, you can
uncover areas where potential employers may be fexible. For example, if a
company wants to stagger the start dates of a group of new hires, management
might be willing to accommodate your preference for a certain start date. If you
have special expertise or experience, you could ask your interviewers if you might
qualify for a more senior position. You might also fnd that volunteering for a
particular role or agreeing to move to a less popular location could qualify you for
a customized package.
2. Take a long-term perspective. Ideally, you will face the task of comparing
job ofers from multiple organizations. When doing so, most candidates focus on
salary, bonus potential, and other “year one” items, such as a signing bonus. But
what happens afer year one?
With a little research—such as calling alums from your school who have
worked for the frm for several years, or asking your interviewers directly—you
can get more information on trend lines. For example, Company A’s $80,000
salary might sound better than Company B’s ofer of $70,000. But if you learn that
Company A provides only cost-of-living raises, and Company B ofers much more
generous pay increases, the salary issue may level out or even reverse.
3. Create a scoring system. Te number of factors at stake in a job decision
can be overwhelming: role, location, department, pay package, amount of travel
required, and so on. Job candidates ofen fnd that they can efectively determine
which issues matter most to them by creating a scoring system by which they can
compare the various issues at stake. Afer weighing all the known elements of a
job and likely trend lines, you might decide to negotiate the one or two issues that
are most important to you.
4. Demonstrate flexibility. Because organizations are ofen hamstrung by
policies and procedures, your interviewers are likely to appreciate some fexibility
from you regarding how they meet your interests. You might explain that it
matters little to you how the total dollars that you earn your frst year on the
job are divided up—among base salary, signing bonus, year-end bonus, and
educational-loan repayment, for example.
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In addition, think about how you might deliver more value to your employer.
If you had hoped for a break between school and work, but they need someone to
start right away, you might agree to start immediately in return for an extra two
weeks of afer the busy season. Such relatively minor concessions could inspire
employers to reciprocate with fexibility on issues that matter more to you.
Kevin P. Mohan
Senior Lecturer
Harvard Business School
by Katherine Shonk, Editor, Negotiation Briefngs.
First published in the December 2013 issue of Negotiation Briefngs.
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